tv On the Move With Rishaad Salamat Bloomberg October 26, 2014 9:00pm-11:01pm EDT
failing the latest stress test, and the biggest was in italy, while spain, france, and italy. ms. is a pretty big blow for italy. it is a good bank. greg yes. 1472. worst is absolutely the cap the lies. again, that it is not stringent. ratios, etc.. >> yes, the bank authority from europe, there was the ecb report that found that 25 banks failed. failing.t of 24 banks tougher. they have got nine months to fill these gaps, where as we said before, the 25 lenders from
the ecb, no french, no german, no spanish banks or belgian banks failed. this was a big concern. now, the comment right asset quality review. this also involves the contraction. rising unemployment. ecb president was talking about the asset quality review. and 25 billion euros was found again. there was the 2.1 billion euros. that is the impact. >> you mentioned the string in c of these. how stringent were they? you said they may have been more stringent than the previous stress tests. >> they had really tough stress
tests. these are the same as those. the bank of england is going to come out with their results on december 16. that is the crucial test. therefore, this is really about the euro. it is also about the eu banks. now, is in the eu, with a debate going on, but the bank of england are going to have even tougher tests. for example, they will have more of a decline in house prices. also, thef england static balance sheet will be compared to their dynamic balance sheets, really changing the structure of how banks are looking ahead with their vision. british bank may be got off this time around, but the big one is in 2016. and the reaction. it is difficult to find a reaction in asia, but if i walk around the corner, the markets are up. the bank picture, which is
really this. first, we go to australia. this is currently the australian story there. the banks are up a lot. and the u.k. banks when they open, they will have a little bit of a lift. the report is very encouraging. banking there is extremely well capitalized. report reaction to the of the ecb looking at high-level transparency, positive vibes. and we will show you the japanese banks. and we have financials. the banks are marginally higher. again, no decliners. no gainers. in australia and, of course, in japan.
there was the hsbc opening price. perhaps it is the only bank that really relates to the european banks. it is definitely an upbeat story. on the euro. quickly. as you can see from this, the euro, there it is. see, slightly changed 1.268. >> some investors are taking this as a signal to buy, actually. of the the real pulse investor? >> it may be time to get back into the market. some investors are saying that equities have reached their lowest. the fear is that there are are extremely high levels and that back.ay be time to get history is on their side.
bloomberg data looking at an average 9.7% over the three months following searches in bearish bets. now, we have seen a lot of that. this jumped to the highest on record this month. this isx tumbled, and from a six-year high in september, and now we do have a more positive outlook for corporate earnings. we are seeing that the central bank may be adding stimulus. next the pessimism, the recent pessimism, coming from the lackluster economies, actually. >> exactly. lackluster economy and also fact is from overseas, ebola, a slowdown. all of this leads to jitters in the market. volatilitynikkei index, where investors view what they could expect when it comes to fluctuations in the market, that surged two and eight-month high on october 17, and now we have the yen. that is bigger losses in
japanese stocks. but investors are now saying that this may be the right time to get back into the market, because markets are not euro pessimistic about japan right now, and when it comes to corporate profits, they are going to see a surprise maybe on the upside, so we are expecting to see what happens with that. >> thank you for that. ticky and with some other stories we are following for you today. office onerm in after a campaign was deemed too close to call, and beating an opponent by 51.5%. was the election runoff with executive social change with more business friendly policies. and the indonesian president says members of his preview government and state-owned his first cabinet and fulfilling a pledge to
appoint technocrats and others to the lineup. and one man is charged with running the largest economy, and he was deputy finance minister in the previous government but has now stepped up. and the monetary advisory committee expecting a slowdown. this is down from the past three months. this is as domestic demand weakens. this comes as they predict next year's expansion will cool to 7%. that is, of course, unless the government steps in with stronger than expected stimulus. they're also looking at property development. well, construction bank last week posting its weakest growth since 2009, and we have got other chinese vendors out with their numbers, so what can we expect here? let's bring in our analyst. let's start off with the construction bank.
it is not all going well for the rest of these banks. >> right. the third-quarter profits, 5% year on year. it is as low as since 2008. and the income fell about 4% year and year, due to the regulator, and we also see funding costs going up, as reflected by a 17% increase in the interest expense, and lastly, we have to focus on rent. we do see an increase by 73% in the third quarter compared to only 32% in the first half. is theat is -- that issue, isn't it? credit quality when the banks come out with their numbers? >> a primary focus for most and this, i believe,
could be coming from manufacturing loans and other loans, and that could still be a problem for the banks. companies set up this. why does china want to this? itshina may want to expand political influence. in fact, china does have deep pockets and provided most of the initial capital for the new bank. we look at the banking system in china, it has a low deposit gives a lot of excess funding to lend to other countries. and then more funding offshore. >> thank you very much, indeed. >> yes. >> and there is no chance of double-digit growth for the sector. we will explain when "on the
♪ >> we are back with "on the move ," and we have big chinese banks releasing data. jim is with me now. jim, china construction bank. bigll we need is one more bank in china with a result like that in the third quarter. earnings up 5%? >> no, totally inadequate. we were on the cusp of having double-digit earnings growth in this sector. one more big bank report like this, and you will not have it. >> it is a huge bank, isn't it? >> it is. it is china, basically. talking about?
is it the credit quality that people are talking about, and if so, what do they see? upthe cost of credit went 73% year on year in the third quarter. this is pretty devastating. now, about half of that -- well, some portion of that is related to their investment in brazil, but underlying it is the fact of the deterioration in china is not slowing down. it is going at the same pace we have had all year. we are not done with the credit crunch in china. >> 70 odd percent. >> 72%. this is also a very worrying approach, because as they said thatconference call, ccb, they did not have any access to anything other than public information. >> so why did they buy it? >> it is hard to understand, and
the thing is about 5.5 billion worth of bad loans coming from that investment in this quarter -- >> ok. i think you are saying also that concept now.whole >> and why would a chinese bank buy into a brazilian bank? it does not pay off. and i think the fact that they had to recognize so much from this subsidiary that they just had at the end of august, it shows what is wrong. the bank m&a does not look very well. hsbc.sk and the last three or f3 we were years, trying to unwind it. >> where do we go from there, and what will be the highlight? we watch out for? if one of them has a really poor result, will that particularly one really set off the alarm bells? >> if it is similar, we are in
trouble in china. >> i suppose what is happening there is that the banks are reflecting what is going on in the broader economy. still going that is some. >> it is still going some. if you believe the number. there is no way to correct for reality here. the problem is that banks reflect directly how the economy is doing. results show the economy is not doing that well. to the honge on kong exchange. in october, we are going to be given two weeks notice. it is not going to happen this month. we do not know when it will happen. what is going on? >> the cover story seems to be the tax issue between the mainland and hong kong. it is a cover story. ,etting up an escrow account and you hold the money for six months and refund it after six months.
it is easy. so it is either politics, or it is something in the operations. if it is politics -- >> in terms of operations, it should not be that much. people are trading currencies globally and trading stocks globally, as well. why would there be an issue hong kong,nghai and operationally speaking, jim? is it is very complex. you have got foreign exchange issues. you have got cross-border share issues. you have got tech issues. you have a lot of issues. hundreds of participants. and it could be very difficult. >> quickly on the politics side. >> yes. is politics, then maybe the through train never arrived in hong kong. >> jim, thank you very much. always good talking to you. right. as we have been saying, no start date for this.
it was supposed to start by the end of this month, at least. we have no sign of it happening. there is also speculation that it could be happening because of the occupied protests going on. we have more. >> yes, and maybe one of the biggest setbacks that we have had since the occupied protests began, but a pretty big blow from the hong kong exchange, releasing that statement that says no start date for the shanghai. and then no timeframe on when the is, and they said that preparations are complete, but the one thing that is missing is the final approval from chinese authorities and regulators, and it may be because what is going on. the occupy protests going on a fifth week, and they say the delay and the stock exchange might be a way to show how displeased they are that hong kong cannot put an end to these
demonstrations. as you know, the program will give international investors never before access to buy chinese $4he trillion stockmarket knowledge has been very tightly restricted in the past, and it also gives mainland investors a chance to buy stocks in hong kong. this is adding more pressure to restore social order and get the city back to order again. >> well, i mean, of course, this is something which has been highly anticipated. there must be a concern, right? >> yes, i mean we are talking about six months of preparation, and still no set, or they yet. and the shanghai composite taking a bit of an impact. they posted their weekly loss partly because of some of the concern about when all of this is going to start, and mainland shares are down the most since march compared to the hong kong counterparts, and the chief executive mentioned today that there are no set time frames.
he also said he is kind of out of the loop in terms of these decisions. joining us from central hong kong. still on the way, one of the most important events of the week, the fed decision that may and the stimulus program. that is, of course, dominating our foreign exchange headlines. that is coming up. ♪
headlines this monday, october 20 seven, and i am john dawson. the fed meats, and no changes seen. to the the end quantitative easing bond buying, and the question is, will it be? the russian currency is the biggest loser, and this after standard & poor's said their rating concern was mounting and that may lead to a selloff. moody's cut the rating one level only last week. and in asia, the yen. we look to the bank of japan meeting this friday, but before .hat, we have tomorrow this is again in august. and here is the yen. you can see a bit of a dramatic shift. crucial one.
that is the japanese yen. and obviously, the ecb looking at the bank authority, and you can see the waiting for the european banks. 8.10% change. and the euro. those are the forex markets, the stories running markets this morning. as john hascourse, been mentioning, talking about the health of the eurozone banks, the ecb with the latest results of the stress tests. here is all you need to know in 60 seconds.
and we have about a few minutes to go before the start of the trading week. let's look at the prospects. aboutere was a loss of 1/10 of 1%, and features indicate we could have a steeper loss than that. and some positive signs, something for the bulls to put their hats on. a solid session in new york. not much of a solid session in new york, where we saw many of the equities on the way down. effort you are straight weeks coming to an end on wall street. come, a mix of old and new. after the break, we will take a look at some of the leading picks. ♪
in hong kong given the premarket. delay to the can the shanghai, that is crucial. -- the delay to the connect, that is crucial. here they are, right now, you can see the markets close. that is new zealand, the rest are seeing opens. hong kong is falling as well. hk exchanges, the biggest decline or. .-decliner the big one is this. we know about it but we do not know why it is happening. to the delay long-awaited joining a forest with hong kong and also shanghai.
other markets are opening as well. taiwan, you can see that. malaysia. , bank of japan on friday. the fed meets tomorrow and also friday. the question is, will they ended again? james talking about is a easy time to end it. -- is it the time to end it there it's australia's number one on the charts today, you have retail and food. this corporation is rising -- corporation is rising, the hong kong is the story because of the exchange. i will show you again. jar, there is no graphic detail, here it is.
-- again, the chart, there is traffic detail, here it is. 4.4%, the biggest fall in hong kong. this, it is aon story that is developing. the crucial one is, how long will it be delayed again, and is the reason because china is angry, frustrated it the occupy hong kong process. that could be the reason, no one knows why. that is the hong kong exchange clearing system. rishaad. >> indonesia's new president has named his cabinet. it's the lineup is a mixture of technocrats and old government hands. let's go to haslinda amin. tell us about this, this is the first cabinet, what surprises were there? good morning.
the surprise is that jokowi managed to line up a credible cabinet. never mind it he does not have a majority in parliament and has had to barter, make concessions. are to bes choices competent in on the last even those chosen from other parties. they say that his picks are signs of principal and compromise. i want to show you his top posts, finance minister. safer hands, they say. head of theice ministry of finance, a professor of economics at the university of indonesia. the coordinating minister of economic affairs, a former state owned enterprises administer. jokowi also tapped the railways cheap to be -- chief to be the transportation minister.
>> tell me about women here in the cabinet. how did he do in his choices there? >> you know what, he did pretty well. .e gave key roles to women he appointed the first woman foreign minister in indonesia's history. the state owned enterprises minister, also a women. the minister of fisheries, also a woman. >> we will continue with all things indonesian. now. connelly joins us a very good day to you. what do you make of the choices overall? >> i thought it was an interesting cabinet, as has linda said. said.inda there are signs of compromise. in the areas where he has shown pushing specific
reforms, we have seen him appoint technocrats in business when with a record of success -- businessman -- and businessman with a record of success. bag. a bit of a mixed >> in your research, you saw that there are four ways to look at this cabinet. tell us about that. >> rate, so again, on the issues that he really cares about, his appointed technocrats with a track record of success, that on issues where he has expressed less interest, he is appointed a mixed bag -- has appointed a mixed bag. the minister of foreign affairs comes from the foreign ministry and is very much a career diplomat. while she will be the first indonesian -- female in the nation prime minister, she is my much an orthodox choice in terms of coming from the ministry and
the mindset -- very much an orthodox choice in terms of coming from the ministry and the mindset that that represents. hard-line stance that made it more difficult to come to a negotiated settlement as a indonesian government was able to do when you left power, and he is the minister of defense. that is a less positive sign. >> i know that he is a close confidant of the chairman of jokowi's party. how about her influence in this? >> her influence is seen throughout the cabinet. there was some speculation last week that jokowi was trying to use the vetting process by the corruption eradication commission -- a new innovation -- that he was trying to weed saying that ity
is not that i do not want these folks in the cabinet but they could not pass the vetting process. but many of them do appear in the cabinet. just to name a few examples, some people very close to him. the minister of state owned enterprises. that is a political patronage position. it is known for being a position from which parties distribute political patronage. a lot of influence in this cabinet. >> you mentioned the technocrats who are essentially the ones who have been appointed for some of these so-called signature policies, the one that his -- ones that jacoby is most interested in. -- jacoby is most interested in. minister still lives in rome, where he was an official with the agricultural organization. that is a really key , whoization for jokowi want to focus on maritime affairs in indonesia.
that is not a foreign policy position for jokowi. remember the indonesia is an archipelago. for him it is about better connecting the islands, but he easier to trade. it is a very critical position for him. we are also looking at transportation, where he is appointed he had -- i am sorry, the former head of the rail , who is notndonesia your typical leader. importantother very one for jacoby, who wants to increase funding for infrastructure and transport infrastructure in particular. >> you also have these expositions which are being filled up through patronage, party patronage. how does that set with his avowed goal of clear politics? we saw the reaction last night from the volunteers who supported him throughout the
election campaign, particularly when his party was not supporting him. they were disappointed to see a number of them in ministerial positions. some of these not known to be the cleanest individuals in indonesian politics, that was alarming to the volunteers who spat their blood and sweat and tears to get him elected. it'll be interesting to see how they react to the cabinet over time, with a become disillusioned or redouble their efforts. -- whether they become disillusioned or redouble the efforts. >> but have a look at some of the other corporate stories we are following this morning. panasonic's latest plan to shake up its money-losing tv business. we're hearing the company is selling. they may agree on a deal by the end of the year. we may find out more when panasonic reports this week.
another company reporting, sharp reports on friday. results may fall short. a newspaper says that net income may miss the bloomberg survey i-64 said in the last half. 60% in the last half. a spanish cable operator is looking into tax fraud. the issue concerns tax declarations made before idea was closed. it was bought for nearly $10 billion to boost tv and internet services across europe. those are the top corporate headlines from this hour. tim cook is continuing his trip into china today. he is excited to meet with alibaba's jack ma. our tech group is here with me, she is the best to talk to on
this. what would we expect on a meeting of these two? >> expect the conversation to be a two-way flow. alibaba wants to expand the u.s. as much as apple wants to expand in china. if you look at what tim cook says, they want to double stores in china. they already have the flagship store. >> they are saying it will be the biggest market. >> yes. and they have a flagship store on alibaba. it is essential for apple to have the cooperation of alibaba for intellectual property rights and because alibaba dominate such a large sector of the e-commerce market. having that would definitely help them. they does seem as though are swapping countries, because we did have jack mine california last week talking to the entertainment industry. >> he is shopping around
hollywood, according to our sources. he is meeting with big studios, shopping for content and also distribution deals. even a possible state investment in some studios. the reason it -- stake investment in some studios. the reason is that he is expanding in entertainment. >> content is king. thank you. tim cook and jack meeting. up next, the cloning scandal that shook the world. the disgraced scientist involved and the whistleblower that feared repeat. this is "on the move." ♪
for its high-tech products and internet connectivity, before a country with such a tech savvy reputation, has had trouble cashing in on the web. we take a closer look in today's global outlook. >> when you think of south korea, offbeat top of your head, you think of tech companies like samsung. they have been built on exports. and now boast one of the worlds highest internet connectivity's and speeds. wideningwonder that a gap is in trouble for the government. the deficit has tripled since 2010. the globalt to leader of e-commerce, the u.k., which has a $1 billion surplus. what is holding back south korea's reach on the web? one, the choice of internet browser, or the lack of it. south korean financial regulators say that they favor
microsoft internet explorer. that means that payment systems are often incompatible with other popular browsers like chrome, firefox, or safari. get onto the right browser, you will have to install activex security software, online security, digital keys -- you will end up going out to shop. the south korean government is taking notice of the challenge. they have called on policy makers to remove hurdles to web aced exports. -- web-based exports. where will they be focusing? china. want to take they advantage of chinese spending power online. to have 800ected 50 million people on my next year, and k pop idols are popular.
but attracting shoppers will not be easy. although analysts a there is huge money to be spent online, the purchasing process needs to be much more simple to attract the shoppers. if south korea follow through with plans to streamline, that will be key. that is your global outlook for today. >> a scientific scandal that shocked the world. in 2005, a south korean scientist claimed a right through in the cloning of human stem cells. the work was proven to beef bake --be fake. clinical calm of this hospital lab is removed from the scandal he found himself involved in 2005. in those days, he was a junior researcher for a stem cell scientist. he had become the first to successfully cloned dogs and was working on cloning human stem cells.
when plans were announced to cry and external procedure on a paralyzed 10-year-old boy with the promise he would walk again, delete details to a journalist -- he details to a details tol --eaked a journalist. >> stopping the test was what everybody wanted, and they were happy that they could. >> the pioneering work had made him world-famous and a national hero. eventually, the truth prevailed. in 2006, he admitted the fraud. i, as the report author, take the full responsibility for using fake data related to the stem cell thesis. --cknowledg all of technology all of that and apologize once again. >> hwang was found guilty and his license to experiment was
revoked. he was handed a two year prison sentence. he offers a service cloning dogs at 100,000 a puppy. he has a degree in bioethics and is concerned that history could repeat. >> all the facts that started scandal still exist. researchers are tempted, and if somebody gets tempted, another scandal could happen right now. >> paul allen, bloomberg. >> we're heading into a break, but on the other side of it, abba sang about a rich man's world, but the guitarist wants to can sign up money to history. we'll find out why he is changing his tune. ♪
making headlines around the world, britain has ended combat operations in afghanistan. flag was loaded for the final time in the base was handed over to afghan forces. it has been the center of british operation since 2006. british troops are expected to head home by the end of the year. japan is showing off the strength of its air defenses in a campaign for winning support for giving their military a broader international role. government has andted the defense budget is reinterpreting the constitution to allow the military to defend allied forces under attack. the leaders of a hong kong's democracy protests have apologized to supporters for calling off a vote on strategy and the poll was postponed
because there were too many opinions inside the disparate campaign to make the referendum possible. the street protests are in their fifth week, with campaign leaders returning to court today to defend their actions. museum in stockholm is symbol of theely drive to a cashless society. visitors cannot use cash to get inside and the bassist has made it his personal mission to consign cash to history. i am a former member of abba and always a member of abba. i am standing right here in the heart of the avenue of museum in stockholm. -- abba museum in stockholm. people look at the outfits and all of those vinyl records that we have from all around the gold here -- globe here. you cannot pay your entry with cash here.
in sweden, we have our own currency, and we are very quick to adapt to new technology. sweden would be the ideal country to make cashless. the whole thing began because my son was burgled. i thought to myself, what would happen in a cashless society? what would they do with that , if itr, that smartphone cannot be transformed into cash? i have gotten into it, the more i think that it will add benefits to a society that goes cashless. and i want to find out what those benefits could be. , andted to make an example i thought of this museum it should be cashless -- that this museum it should be cashless.
the economy today is digital anyway, and we are going that direction whether we wanted or not. week away the metal. -- take away the paper and take away the metal. nothing is going to happen. it is an abstract symbol. a museum where people can go and look at coins and bills, i think that should be the future. bloomberg app to your tablet, it is available on android, apple, or windows operating systems. audiences were looking for a thrill over the weekend with a horror flick before halloween. "ouijaernatural thriller " populist. -- topped the list. we have the canada research and
be live in jakarta, singapore, and right from hong kong as well. , amongsturther ado them, the oldest one of the world. wer and -- andand julie germany all past. the federal reserve had their tested the u.s., if you recall. this is on the same level. there were two that failed. one was a central bank, twice i failed out of the 30 being tested. the authority had their test as well, a bit smaller. the eba was 50 pages long. 24 failed, 123 were tested. as you mentioned, .5 billion
euros was the gap at the end of 2013. the italian banks failed significantly. they said that it was the middle of a recession so it is unfair to test us, but hey, let's move on from that one. the stress test >> -- what did they look at? >> the new risk was the asset quality review, that made it harder. they factored in the contraction of the european economy. falling house prices. >> worst-case scenario. reaction, they wrote, very encouraging. the bank system in europe is well-capitalized with transparency. a high level of transparency. they are convinced that this is a good report. >> let's talk about the stringency side. how stringent were the tests?
do we have reaction on the markets? >> today, they opened the union banks. watch hbc, when it opens again, that is the relevant one. hbc being a british bank, or a hong kong british bank, there is a tough test to come rid the bank of england will have 17th, and that will be tougher rid the bank of engla is looking at what they called the dynami balance -- the bank of england is looking at what they call the dynamic balance sheets. moving is tougher to look at. the british banks got off lightly in this one and past. come december, it could be a different story. >> anything market wise? >> i will show you the euro. nothing dramatic, but let's look
at the euro, let's look at the charts. the yen, ignore that, look at the euro picture so far. there it is, back it up there, you can see the euro. very positive. that is the performance today, that is the reaction you can see. it was the reaction as the figures came out, and you can see that as the markets digested it, that was encouraging. the hbc story, and look at the markets overall. the nikkei, the hang seng. to one of the biggest, hbc, there it is. u are asking is what does it do, the answer is not much. the banks in a japan and australia are seeing a collective gain. of course there are ties to asia.
passing stricter, stringent rules, does it better medicine i'll apart from the italian story. better apart from the italian story. what we have at a moment, gilead 4% loss so far. -- what do we have at the moment, about a 4% loss so far. the occupy street protests may have something to do with that. yvonne is joining us from the street protests. what we know so far. -- what do we know so far? a day aftercomes the hong kong exchange chief executive released a statement saying that no start date yet on the shanghai hong kong stock and it, saying that technical preparations are done and what is missing is the final approval from regulators and chinese authorities.
some are signaling that this may be the chinese way of showing how displeased they are at how hong kong cannot put men to these occupy protests. they say they have been going on for too long. it is starting to show an impact. the chinese state council of italy holds the key to when the stock and it starts. the program will give international investors never before granted access to buy on china's stock market, which has been tightly restricted in the past. it also gives mainland investors chances to buy stock listed in hong kong. this is adding pressure to the hong kong government to restore order and get the city back to normal. to be a concern. a lot of people have a vested interest in this, it has to be a concern for them. you're are talking about six months of preparation here.
a lot of brokerage firms have added more staff as well as more resources into this program. they say that something new to be done from the chinese government. clearly what they are saying here. they are saying that may percent drop in the first 30 minutes of 8%ding in hong kong, -- drop in the first 30 minutes of trading in hong kong, a cap be a coincidence. -- it can't be a coincidence. will be focused on the street protest in a few moments from now, talking to the chairman of the new people's party. gina joins me shortly, you do not want to miss that. let's have a look at other stories that we are following, and academic member of the monetary policy is expecting a china's economic growth to slow to 7.2% this quarter, down from the last three months. that comes as domestic demand weakens.
it also comes after a research institute for next that next year will slow down to 7% unless the government steps in with stronger stimulus. this is due to decreasing exports and property development. the number of people giving up u.s. citizenship has jumped since the announcement of new tax laws. andnew rules take effect make it harder for xp address hide assets from u.s. tax authorities. there is a warning of more car recalls as car companies fight for customers they have a tendency to announce recall whenever there is a question about quality. cars offfter they take the road over potentially be valera bags made by a japanese -- potentially be both airbags made by a japanese manufacturer.
some people say that the weakness represents a counterintuitive buying opportunity, but here is a look at the prices. >> this is certainly helping it today. you can see the decline, gains their 80%. this is the overall map for japan. i will show you the picture for the nikkei 225. there are declines in the gas industrials. there are gains in technology. the european stress test, we are seeing banks rise on that. nothing dramatic, but the stocks are rising. mitsubishi financial. a slight relief. since we are talking about japan, bets are piling up
against japanese stocks, but some are taking the as a signal to buy. sherry is taking a look at that, and what have we got? >> they are saying it may be time to get back into the market, equities may have reached lows. that this may be the time to get back into the action. history seems to be on their side because bloomberg data shows that since 2009, shares have rallied over the three months following a scourge. we have seen a lot of that happening recently, shortselling in tokyo jumped to the highest on record this month, closing 7.7% from a high in september. we have higher corporate earnings and a better outlook, the central bank saying that it may add stimulus. investors saying that it may be time to get back. thank you very much. thank you very much. the construction bank posted its
growth. let's have a look at what we can expect. francis, we had jim on and he replicatedhis is across the board, forget it, they will not get double-digit growth for this industry. >> i would say that many of the negative banks and you have seen, the china construction bank, you have seen avoidance. because of the ban on products. callsalso seen widespread for the bank reflected by the 17% increase in their interest expenses. of course, on top of the credit authority. the firstrsus 32% half.
in the first half. and they rose 20% in september. in the third quarter, only a 10% increase. so no good for most china banks. >> it is all about credit quality, and the rise of these bad debts. the ccbu look at results against other banks, they are lending happily to retailers. china, another bag of importance, it has the sharpest increase -- and of importance, it is the sharpest increase among the china banks. i think the key concern is that credit quality is getting worse and worse, even after multiple runs of targeted using by the central bank. bank.ing by the central we cannot see a turning point
yet, that is the worrying part. >> what about the infrastructure bank? what is in that for china? expanda wants to political influence. china has deep pockets and it would provide most of the initial funding for the bank. if you look at the china banking systems and the loan deposit ratios, they do have access funding to lend offshore. that could help to relieve the appreciation pressure. >> thank you very much. francis from bloomberg intelligence. up next, hong kong protest. the review strategy as they enter a fifth week. ys theyty share sa should -- party chair says they should engage with the government and compromise. ♪
>> the leaders of the democracy protest are promising a rethink on strategy after calling off a meeting on where they go next. organizers are going to the court today to defend their actions. they say it depends on how the authorities react, and that does include beijing. >> it all depends on how the government will handle the problem. that includes the chinese government in beijing. because this movement would not have been there and were not have been that successful without the decision made by the sending committee -- standing committee on the 31st of august. what are they going to do about the decision? it is quite unconstitutional. they have gone much further than they should have. according to their own interpretation. joining us in the studio is
the new people's party chairwoman. thank you for coming in. we army with -- where are with the fifth week on this? >> the government is waiting this out. they are waiting for the review of the injunction order. last week, a temporary injunction order was granted. it is being heard in the courts. because it is waiting for that. -- the government is waiting for that. >> is is counterproductive for the students? >> they are losing public support. there are people that are badly affected by the occupy movement. i think that the great majority about the movement to end. >> but not what they necessarily believe in. where do you stand on what they believe in? they want democracy, they
need to return to rational discussions of the details. beijing's decision in august allows room for democratization within the framework. the students could ask for their representatives to be represented. >> exactly. they were talking about putting more governance into the parts of china, that is giving more wiggle room. why can't be committee make a different decision now on this? >> the framework decision allows room for new organizations to be represented. of underrepresented elements our society to have a voice. but listen, it is only a framework for decision. the power on hong kong's democratic process is distributed between the beijing, .ong kong chief executive people like us play a big role, but we cannot get the work underway until the occupy thing
is out of the way. >> what do you want? >> i want competitive elections. that would strengthen the mandate. that has notne necessarily had a hand-picked nominee? >> i do not think any nominee will be hand-picked, because i think the voting will be by secret ballot. you cannot rule out some members out of the two or three votes to a moderate democrat. >> which way would you go? >> i am happy to go along with that. i am not afraid of competition. >> what happens next? what are the next steps if the occupy movement goes off the streets? there needs to be dialogue, duster not? -- does they're not? studentsk of the should consider -- i think that the students should consider their dialogue with the government.
there could be different channels. i am sure that the government is also talking to the students through back channels. one way or another, they should return to the conference room, the forum for rational discussion. tothey can write a letter beijing saying that the situation has changed and have a review of this. what are the chances? >> i'm sure that beijing will take into account what is happening in hong kong. the government does not really have the power to change the decision, but they know what is happening, and will factor that into their consideration. >> but there has to be a way for there not to be a loss of face on either side, or all three sides. >> the government has made specific t concessions on the televised debate. the students should grant that the government has said that there will be ongoing dialogue. democracy is a work in process. how would you rank leung
here are stories making headlines around the world trade the brazilian president has won a second term in office after a campaign team to too close to call. --ma rousseff peter opponent beat her opponent. this was a decade of social change versus the business friendly policies of her opponent. britain has ended combat operations in afghanistan. the union flag was lowered in cap bastion for the final time and the cap handed over to afghan forces. this has been the center of operation since 2006. a second basis to be handed over soon and all british troops will ead home by the end of the
year. japan has shown the strength of its air forces in a campaign to give it a broader international role. they compete with china and russia to dominate these guys in asia. -- the skies in asia. a scientific scandal that shocked the world. a south korean scientist claimed a breakthrough in the cloning of human stem cells that was later proven to be fake. we'll have a report on what the disgraced scientist is doing now. the clinical calm is far removed from the scandal he found himself involved in in 2005. he was a junior researcher for the now disgraced stem cell the first tong, successfully cloned dogs who was working on cloning stem cells. when plans were announced to cry an external procedure on a paralyzed in-year-old boy, with the promise he would walk again,
he leaked details to a journalist. and theournalists citizens group had a strong motive, that boy. stopping the clinical test was what each member wanted and they were happy to stop the test. >> there was a powerful back ru. against but eventually the truth prevailed. hwang admitted fraud. >> i take the full response ability for using fake data related to the stem cell thesis. i acknowledge that and apologize once again. >> he was found guilty of embezzling government money and his license was revoked. he was handed a suspended two year prison sentence. he works in china, where he offers a service cloning dogs at
$100,000 a copy. is a phd in bioethics and is concerned that history could repeat. >> all of the facts that started the scandal still exist. to this day, many researchers are tempted by those facts. and i think, if someone gets tempted, another scandal could happen right now. >> paul allen, bloomberg. way, joe cole we fix team and it is a mix of old and new. we look at the leading names. also, the drop in asian equities. getting cues from new york on a friday. this is "on the move." ♪
market disconnect. it markets tumbling with no date for the shanghai link. stoxx's with technocrats and old government hands. the bosses of alibaba and apple meet today. but sticky look at the biggest decline is out there, and it is about the hong kong stock link or the lack of it. what do the markets say?
>> uncertainty. even the man in charge does not know what is going to happen. because china is distracted or angry because of the protest, no one knows why, but he has been delayed and there's no start date given. that is a blow. as -- getl by as much rid of that, that is not a nice color. as much as 5.1%. , it jumped up, it is not dow -- now down by 3.5%. you can see the reaction, it is quite clear to see. look at this, overall, the pie chart. pull up the hsi, there it is. stocks,see that tech the financials of the key ones
to watch out for, one of the biggest declining sectors today. look at financial services, look at this -- look at that, first of all. 3.8%. we know why. stock is,ess what the there we go, hk exchanges. that is the impact it is having on hong kong. it is a heavily weighted company. can see the hong kong is the biggest falling index, down 5% because of the weighting of the hong kong exchanges. to the overall pie chart to the overall picture shows the hong kong is the biggest decline because of this delay to the connect between shanghai and hong kong. 9:33 in indonesia, where the president has named his new
cabinet, a mix of technocrats and old government hands. in jakarta. some old, some new what is the reaction to this -- new. what is the reaction to this? >> the reaction is mixed when he unveiled's cabinet. -- unveiled his cabinet. he turned to members of previous cabinets and the head of state owned companies. businessmen and technocrats to lead his economic industries, hoping they would intimate policy and chemical solutions for problems inherited from the previous administration. the subsidy is slowing investment and shows the lack of infrastructure. the cabinet has eight women, twice the number of the previous . he also appointed an ambassador to the netherlands.
>> the thing is, we have a lot of promises made in the campaign here. what is the overall opinion about this cabinet? get help them keep the promises? -- can it help him keep the promises? he he wants to modernize= -->> wants to modernize the indonesian maritime sector, and he has appointed a very competent hand in the industry, the former director. this new ministry is the only one not filled with technocrats -- entirely filled with technocrats and not allocations read it gives an indication of how serious he has. she has a lack of experience in the field. back to you. >> were going to go from indonesia to have a look at tyler -- we are going to go from
indonesia to have a look at thailand. reservoirs around a 15 year low and agriculture is drying up, but there is a silver lining. aminnda allman -- haslinda has more for us to just a few years ago, we were talking about floods there. how can there be any good news out of this? >> there has been an oversupply of rice in thailand. rumor that the government was buying rice directly from farmers at above market rates. that is part of a government program. that led to record stockpiles accumulative. another large clock -- the community. -- accumulating. this may be a good thing, just not for farmers whose livelihoods are at risk. and not for the economy.
the banks are forecasting the slowest growth rate since 2011. that is when thailand had record floods. here's the thing. agriculture accounts for a percent of gdp. -- eight percent of gdp. be big, but ind terms of rice production, it is per the good news. -- it is pretty good news. >> what about the government turning off the caps and cutting off supplies>? ? >> one levels in thailand or a 15 year lows. -- water levels in thailand are at 15 years low. the government wants to conserve so they are turning off the taps for now. it is a complete reversal of what happened years ago when floods swarmed the factories and submerged parts of bangkok. the prime minister has said that he is seeking cooperation from
the farmers from now until the middle of next year. he says that thailand will not have enough water for both consumption and agriculture. it is a difficult situation and it will have to turn off the taps. >> think a lot for that. as the -- thanks a lot for that. panasonic is shaking up its money-losing tv business. they are selling their u.s. operations. they may have a deal by the end of the year. we may find out more when panasonic reports later this week. sharp out with numbers on friday, results fall short. -- results may fall short. they may miss the bloomberg survey by as much as 60%. this is due to sluggish sales in the solar power business. alegations of tax fraud at spanish cable operator. this concerns about you out attacks declarations made before the deal was closed.
they bought them for nearly $10 million to boost internet and tv services across europe. apple's chief executive, tim cook, is in china. he is set to meet alibaba's checjack ma. what is this expected meeting likely to be about? >> it looks like both parties have something to bring to the table. jack want to look to the u.s., apple wants to expand in china. go to the u.s., apple wants to expand in china. market, a huge growth driver for the company, and this is the part of the region and the role that they are looking at. also, in terms of online, alibaba plays a very important role. they are the dominant market player. apple has a flagship store on them.
in that sense, alibaba will be playing a role in helping apple to protect intellectual property rights online. knowr ali baba, we do not what these psivida corp said they are going to do, but tim cook has said that they want to cooperate and that is a part of the conversation that will take place. jack ma was in california meeting with some executives in the search for content. >> that is what we learned. it appears that they want to buy movie content from hollywood because the content costs have gone up so much in recent years due to competition in china. you have several companies competing for the same business. if they were able to strike some deals that would give them a competitive advantage, that would help them get further in the business. at tim chen with a look cook and jack ma.
a big week for earnings. we have a bunch of bits and bobs of economic data out. all the key events coming out of the u.s. the next few days. week ahead ofig us. on monday, u.s. health officials will begin monitoring travelers from the west african nations of guinea, liberia, and sara lyons for ebola as they come into the country through five major airport. it is the latest up to keep the virus from spreading. they will be monitored for 21 days and will have to check in with health officials daily and
take their temperatures twice a day. also monday, twitter, buffalo wild wings help to kick off a week of earnings releases. on tuesday, basketball fans can rejoice with the return of the nba, and we will get earnings from the likes of facebook, pfizer, burger king, and bp. of qe3.sday, the end policymakers say they intend to cut monthly bond buying purchases from the current $15 billion to zero. ending the economic stimulus. the bank is also expected to leave the benchmark interest rate near zero. isa and metlife will be among those posting profits, and the u.s. will post their own version of earnings. the economy likely expanded at a 3% annualized rate according to a bloomberg survey of economists.
a pickup from the pace in the first six months of the year. mastercard, starbucks, and conoco-phillips also among those reporting. chevron and hilton release earnings on friday, and personal spending will likely show a slump in september, while incomes will show an increase. that is according to a bloomberg survey. we'll have more right here on bloomberg television. that was the week ahead, including the key fed meeting on the decision to end stimulus. our next guest runs one of the top online trading companies. tim is the ceo and he joins us from singapore. ending decision on stimulus is something that has been front and center of people looking at the markets at the moment. now that we see an end coming up, how much is it priced in, in
your view? >> i certainly think that one of the effects of the qe has been to shore up the markets and suppress volatility. what you have seen over the last few weeks is an increase in volatility as he has come to an end. -- qe has come to an end. >> i was your business? -- how is it your business? people were complaining that dirt was no volatility and now they have the ins beta full -- adefulls. >> investors like volatility, it is what drives them to trade. >> but there was very little going on, essentially. certainly, our first quarter, up to the end of august, was relatively quiet. a lot quieter than the
equivalent quarter in the previous year, which was the first time that you heard the fed start to use the tapering word. 15 months ago now. since then, we have seen a pickup in volatility, and a pickup inclined activity. -- in client activity. haveropean equity markets had a tough time lately down to the european slowdown. of the people been overplaying those concerns? >> those concerns are very real. i do not think it is a mistake to look at europe as a single block. the european union consists of 28 separate member states, and some of those are in relatively good economic shape, germany. some are in poor economic state, let greece or italy. -- like greece or italy. >> you're in singapore, first of all, what brings you there?
what interest are you seeing in chinese equities? how do you get people involved in that? >> we now operate in 17 countries around the world. including one here in singapore. i try to get to all of our offices as often as i can. i'm doing a tour of asia pacific at the moment. i'm heading for australia tomorrow, and then off to japan. in terms of access to the chinese markets, certainly some of the big names have been very popular with our clients. we offer clients the ability to as a grayalibaba ipo market before the ipo, and the close ipo as well. both were phenomenal. i think that clients are inerested in stocks that are the internet space.
an internet stock from china is particularly interesting to them. >> i want to move on to the foreign exchange business. what portion of your income comes from that? also, i believe you have unlicensed for exchange brokers operating -- foreign exchange brokers operating in singapore. it is something of concern. >> yes it is. across the world, 22% of our revenue is foreign equities, the rest coming from commodities and individual stocks. different regulators take very different attitudes towards unlicensed operators. to stamp themkeen out, others are of the opinion that if people are foolish that is our own lookout. that is the attitude here in singapore.
i do wish they would take a tougher line for the production of singapore consumers. >> tim, 40 change trading is notoriously difficult. it is a difficult market to predict. -- foreign exchange trading is notoriously difficult. what percentage of your clients make money on it? >> on a trade by trade basis, more than half of trades are profitable. if you look at are more established clients, they tend to be successful. it is true that it takes some time to learn the ropes, and they are generally less successful. but there is a trend of epilogue or someone is with us, the more likely they are to be profitable theall -- a trend where longer someone is with us, the more likely they are to be profitable overall. they are finding it hard to
>> south korea has become famous for high-tech products and internet connectivity, and we report, it does have trouble cashing in on the web. why is that the case? >> when you think of south korea , of the top of your head, you probably picture tech companies like samsung. the company has been built on the export of tech products, and boasts among the world's highest internet connectivity and speeds, so it is no wonder that a rising trade deficit in e-commerce is a sore point for the government. this has tripled since 2010, and last year it stood at $685 million. compare that to the global leader of e-commerce, the u.k., which has a billion dollars surplus. what is holding back the south
korean reach on the web? for one, the choice of internet browsers, or the lack of it. south korea's financial regulator says that banks favor microsoft internet explorer. payment systems are incompatible with other popular browsers like chrome, firefox, and safari. even if you do get on the right you will probably have to install activex security software, developed by microsoft. add to that the online authentication certificate that you need, the digital key that you need, and also the installation of security software activex, and you will end up going out to shop. the south korean government is taking notice of the challenge. the president has called on policy makers remove hurdles to web-based exports.
where will they be focusing their efforts? china. year, the president suggested taking advantage of the chinese pending power online. they are expected to have a hundred 50 million people online by next year, and k pop idols and soap opera stars are hugely popular and help to boost korean brands. attracting shoppers will not be easy. analysts say that although there is a lot of money, the purchasing process needs to be much simpler. back to you. >> thank you very much indeed. stockholm isum in a rather unusual symbol for the drive for a cashless society, but visitors cannot use cash to get in. bassist has made it his personal mission to consign cash to history. , a former member of a la. -- of abba.
i'm standing in the heart of the abba museum in stockholm. here, people tend to stay for a while looking at the outfits and all of those vinyl records that we have from all around the globe year. -- globe here. you cannot pay your entry with cash. in sweden, we have our own currency, and we are very quick to adapt to new technology. sweden would be the ideal country to make cashless. the whole thing began because my son was burgled. i thought to myself, what would happen in a cashless society? what would they do with that computer, that smartphone, if it cannot be turned into cash? the deeper i have gotten into it, the more i think that it will add benefits to a society
that goes cashless. and i want to find out what those benefits could be. example, andake an i thought that this museum should be cashless. the economy today is digital anyway, and we are going that direction whether we wanted or not. -- want it or not. take away the paper and a metal, nothing is going to happen. it is an abstract symbol. there is a museum in stockholm with a can go and look at coins and bills. i think that should be the future of money, in the museum. >> that is it for this monday edition of "on the move." stay tuned, "asia edge" coming up. angie will do that with me.
expecting big numbers from toyota. it will go a long way to settling the global pecking order. we are live for you in tokyo. something old and something new. government. welcome aboard. the vista jet chairman is here as we take a look at the market for private planes in this region. all that and more in this monday's edition of "asia edge." >> i'm john dawson. across asia, the u.s. also had the best in two years. a foundation with some very different sectors. more on that later on in the show. a five taiwan and china is down, part of the connect delay. as you can